EU targets Chinese subsidies for electric bikes

BRUSSELS (Reuters) - The European Commission launched an investigation on Thursday into whether Chinese exporters of electronic bicycles (e-bikes) benefited from excessive state subsidies, increasing trade tensions between Brussels and Beijing.

The anti-subsidy case supplements an existing inquiry into alleged dumping by Chinese producers of e-bikes in Europe and is the latest in a string of European Union investigations into and measures on Chinese exports ranging from solar panels to steel.

The European Bicycle Manufacturing Association (EBMA) lodged a complaint in November, saying that subsidies came in a wide range of forms, including preferential loans from state-owned banks, grants, export credits, tax breaks and the provision of land and raw materials at excessively low prices.

The association says that more than 430,000 Chinese e-bikes were sold in the EU in 2016, up 40 percent on the previous year, and forecasts the figure will rise to 800,0000 in 2017.

"Today we are speaking about e-bikes. Tomorrow we will see the same with electric cars," EBMA Secretary General Moreno Fioravanti said.

China's commerce ministry could not be reached for immediate comment.

Europeans buy some 20 million bicycles per year, of which about 10 percent are now e-bikes, with the potential to rise to a quarter within five years.

European companies pioneered the pedal-assist technology that e-bikes use and invested 1 billion euros ($1.2 billion) last year, the EBMA said, but they risk losing out to Chinese rivals whose share of the EU market has risen to about 33 percent with prices sometimes half those of European makers.

Fioravanti said Chinese exporters sold at low prices, not because of labour, which made up 3-4 percent of the cost of an e-bike, but because "they have 20, 30 or 40 percent of their balance sheet basically subsidised by the Chinese government".

Chinese producers, including Battle-Fushida, Aima and Tianjin Golden Wheel, sold e-bikes worth some 307 million euros in the EU in the year to September 30.

The EBMA wants the Commission to impose duties on Chinese e-bikes and also to register imports immediately so that any duties eventually set could also apply to e-bikes that enter the EU market in the coming months.

Last week, the EU, United States and Japan vowed to work together to fight market-distorting trade practices and policies that have fueled excess production capacity, naming several features of China's economic system.